It’s often said that the best
customer is the one you already have. If that’s true,
the next best customer surely comes by way of your
existing customers.

Indeed, when KBDN
surveyed the kitchen and bath industry last fall to get
a feel for how marketing dollars are spent, the results
showed 37% were spending money specifically to target
referral customers. Additionally, 67.6% of dealers
attributed closing sales to referral customers. At 184%,
the return on investment was the highest of any
marketing expenditure cited.

In a soft economy, where every dollar
should be stretched as far as possible, a 184% return on
investment is noteworthy. In addition to offering a
great return, marketing for referrals is typically more
cost effective than many traditional advertising venues.

Know Your
Client

Advertising works when you reach the
right person, at the right time, with the right message,
in the right context. Achieving that goal begins with a
quality database. Making this an ongoing priority is the
key to not only knowing your customers, but
understanding them, their families, their lifestyles,
their desires, their design preferences and what moves
them to act, among other things. Once you understand the
subtleties, it’s easier to make the advertising work.

Dennis D. Gehman, CR, CLC, CKBR,
president of Gehman Custom Remodeling in Harleysville,
PA, attributes 65% of his business to referrals. “We
maintain a detailed database including the ‘usual
information’, but we also capture data about children,
pets, birthdays and anniversaries. This helps us refine
our target market, allows us to match each client with
the ‘right’ staff person and, as a bonus, every client
gets holiday cards from us – a great reminder that we
are still ‘out there.’”

Bill Borchert, CAPS, CGR, and Denise
Borchert of Borchert Building Company in Washington, MI
maintain an extensive database as well. “We try to
capture as much information as possible – we jot down
information about hobbies and even how they take their
coffee. Think about how you would feel if you came in
for an appointment and I greeted you with a cup of
coffee the way you like it! It truly starts a meeting
off on the right foot,” says Denise Borchert.

Jim Daniel, president of Daniel
Kitchen & Bath and Daniel Lumber in Savannah, GA
developed his initial database with eNewsletters in
mind. “To gather e-mail addresses at our last home show,
we decided to give away a high definition television
through a free raffle. To qualify, each person had to
fill out an entry blank, complete with their e-mail
address, along with the type of project they were
considering.

A week or so after the show, we sent
out e-mail newsletters to everyone, and plan to continue
on a regular basis.”

“With today’s desktop technology and
a robust database, you can easily market directly to the
individual. Your message to the couple making a decision
about a new kitchen and the single woman considering a
bathroom remodel can be based on the same document,”
according to Kevin Telaak, VP of Artisan Kitchens and
Baths in Buffalo, NY.

Keeping in
Touch

Maintaining regular contact with past
customers keeps a company’s name in the mind of the
consumer, design professionals agree. Denise Borchert
uses the advertising term “TOMA” to describe this. “Top
Of Mind Awareness,” she says, “is critical, so when
someone asks a former client about remodeling, without
hesitation your name is immediately given out – and
hopefully your Web address, too.”

Often, kitchen and bath professionals
don’t take the time to plan and execute the steps
necessary to market for referrals.

Sometimes the problem is they are
unsure of effective ways to reach the level of TOMA they
desire.

Emily Smith, marketing communications
manager for Advanced Kitchens in Marietta, GA,
attributes about 60% of her firm’s business to
referrals, and is charged with maintaining
communications. “One of our primary objectives is to
market to past customers. Some of our efforts include
hosting VIP parties in our showroom, sponsoring ‘Open
Houses’ at clients’ newly remodeled kitchens, offering
generous ‘rewards’ to referring clients and regularly
sending out quarterly eNewsletters. Even something as
mundane, yet vital, as a warranty check is an incredible
marketing and referral tool. The fact that we care gives
us a competitive advantage in a crowded marketplace.”

Gehman Custom Remodeling initiates an
annual anniversary walk-through as part of the firm’s
five-year warranty. “Past customers love to hear from us
and are always open to our anniversary walk-throughs. It
gives us an unprecedented opportunity to catch up with
clients in their home. It is a time to listen to them.
You will be amazed at what you hear and how it can lead
to additional projects or referrals. We also mail
full-color newsletters four times a year, send
eNewsletters monthly, send holiday cards and always send
out a hand-written thank you note for referrals,” Gehman
says.

“Keeping in touch with past clients
is a priority at Sea Pointe Construction,” says
Andersen. “We are in touch with them at least four to
six times during the course of the year. We send
full-color newsletters, invitations to company workshops
and seminars and letters from the owner.”

In the same vein, industry fixture
manufacturer Herbeau in Naples, FL, places a priority on
referral marketing, according to marketing director
Marion Hendricks. “Although we work with showrooms
rather than directly with the consumer, we find keeping
in touch regularly with our dealers by sending
promotional items, birthday greetings, notices of
special pricing and the like keeps Herbeau in the front
of the dealers’ minds. We have found dealers and
consumers alike utilize our Web site to maintain a
connection primarily through press releases and the
interactive showroom locator.”

Join the Team

Dictionary.com defines referral as “a
person recommended to someone for something.” A referral
could be a friend, an acquaintance or someone who has
heard about you through work on a committee, a board, a
social networking event or even an online networking
site.

Richard T. Terry, president of
Accolade Kitchen & Bath in St. Louis, MO, is a huge
proponent of networking events.

“Accolade is relatively new, and so
far most of our business is a result of networking. We
belong to Business Network International, as well as
three other local organizations: Yellow Tie, Gateway
Networking Group and the Business Breakfast Club. The
contacts I have made have resulted in clients, as well
as business associates for Accolade. It is a tremendous
opportunity.”

“Memberships in professional
organizations have been invaluable,” agrees Smith “but
so have trips to the grocery store. It is amazing how,
for example, a chance meeting in the supermarket with an
acquaintance from a Better Business Bureau meeting can
turn into a new project for Advanced Kitchens. Each one
of us is encouraged to follow our interests in the local
community, remembering we are representatives of
Advanced Kitchens. It works.”

Kevin Telaak and other Artisan
Kitchens and Baths’ staff members participate in local
business networking groups, as well.

According to Telaak, “Word of mouth
can be one of the most successful and cost-effective
ways of attracting new customers. In networking
settings, it may not even be the person you’re talking
to; in fact, it’s likely an associate or friend of
theirs who becomes the eventual client.”

Only Online

The Internet is fast becoming a
viable, although still underused, opportunity for
referrals. A variety of sites offer an array of
opportunities, from paid sites to those that offer free
membership.

Among the pay sites are those that
charge a set per-referral fee for each lead they send to
you. These companies market themselves with dozens of
different Web addresses, and are optimized to come up
among first in online searches. The sites themselves
offer consumers information, photos and resources. The
hope is the consumer will complete an online form,
providing a name, address, type of project, etc. If you
are contracted with the referral site, they will contact
you with each lead they receive that matches the
criteria for which you are contracted.

“This would be a great concept – if
it worked,” responds Andersen. “However, in our
experience, we tried one of the established Web-based
referral services and only received a handful of
unqualified leads with unrealistic expectations and
budgets. This might not have been a match for our mid-
to high-end client range, though [it might work well]
for painters or window replacement contractors.”

Other design professionals, however,
have had some success with such services.

In some cities, entrepreneurs have
set up similar lead retrieval sites that charge a
monthly retainer. These tend to be more personal in
nature, with the Web site acting as the initiator, the
firm as the sales team and the kitchen and bath dealer
or designer as the recipient of a new project.

Most kitchen and bath professionals
are familiar with
Angie’s List.com, which is a city-by-city referral
site. It is a site supported by membership fees and is,
according to the Web site, “a word-of-mouth network for
consumers. Angie’s List is a growing collection of
homeowners’ real-life experiences with local service
companies. The people who join Angie’s List are like you
– looking for a way to find trustworthy companies that
perform high-quality work.”

A word of caution to industry
professionals who think they have devised ways to use
Angie’s List to their advantage. Be careful. In relating
a recent conversation with an Angie’s List
representative, Angie’s List is determined to maintain
integrity.

Therefore, each reference – good or
bad – is followed up with a personal phone call to the
member. If it is determined the consumer was prodded,
coerced, encouraged or had their membership fees paid by
the service provider they are recommending, the service
provider receives a negative rating.

Purchasing Google or Yahoo advertising
is a viable way to capture potential customers searching
for the services you provide.

With technology that allows you to
define your geographic region, customize your keywords
and even set your demographics, you have the opportunity
to hone in directly on your customers at the time they
are searching for you. Online advertising also
allows you to determine your own budget, stop and start
the campaign at will and track each lead as it comes to
you.

At the free end of the online
spectrum are networking sites such as
LinkedIn.com. This professional networking site is
based on the three degrees of separation theory, and is
focused on the business community. The site provides
areas for recommendations, questions, job postings, etc.
In an online environment where many of your potential,
past and current clients are networking, maintaining a
profile, complete with recommendations of your work, is
utilizing new technology to make referrals for you.

Additional online referrals are
available to members of NKBA, BKBG and the SEN Design
Group, as well as those affiliated with Kitchens.com and
other kitchen and bath organizations and Web sites.

Beyond the
Refferral

Beyond the referral, don’t forget
about traditional advertising. Especially in a soft
economy, it is still a necessity. In an Internet article
by Tony D. Baker of Xeal Internet Marketing, the author
relates: “A series of six studies conducted by the
research firm of Meldrum & Fewsmith showed conclusively
that advertising aggressively during recessions not only
increases sales but increases profits. This fact has
held true for all post-World War II recessions studied
by American Business Press starting in 1949.”

Mike Stockin, CKD, owner of Kuntriset
Kitchen and Bath Design Center in Norwich, NY, states,
“We get referral business, but our marketing efforts are
focused to the general public, rather than only referral
business. We spend the bulk of our marketing dollars on
local radio and newspapers – and even in this economy,
we are booked deep into the fall.”

Hendricks adds: “The most important
thing is to keep your name in front of customers and
remind them why they bought from you in the first place.
An eye-catching ad can remind them of this and generate
a lot of leads and referrals. Once the people are in the
showroom, it’s all about creating a meaningful customer
experience, inspiring them not only to buy the product,
but to tell all of their friends about your personalized
service, attention to detail and everything else that
makes you the right choice.”

“In today’s economic climate, I find
it hard to conceive why any business would not market
for referrals. It is less expensive for a referral lead
than from any other source,” advises Andersen.

Regardless of how you maintain your
database, what sort of message you disseminate, whether
you’re networking in person or online, Smith provides
the ultimate tip when marketing for referrals: “Always
ask for the referral!”

********

Philip D. Zaleon is founder and president of Chapel
Hill-based Z promotion & design – a full service
integrated marketing and creative agency focusing on the
kitchen and bath industry.

Prior to founding Z promotion & design in 1996,
Phil held the position of v.p./research &
development for a new technology-based communications
firm.

Phil is currently Vice President
Communications/Technology for the Eastern Carolinas
Chapter of NKBA, an industry speaker on marketing,
advertising and technology subjects and author of "A
is for Advertising... B is for Branding... a hands-on
guide to improved profits through marketing your kitchen
and bath business - volume 1".